11/5/2009 600 layoffs loom in fiscal crisis

Fact Checker here. Good story, Chronicle.

√ From what the newspaper reported, there may be as many as 600 layoffs. That's massive! The impact will be felt by dedicated employees, their families and the entire Durham region. It's a terrible situation.

Point one - Fact Checker notes that on many occasions, Trask and his staff have assured us that they hoped to avoid lay-offs or to have only a minimal number. Today's statistics point to the need for massive layoffs, and indeed the execution is now being planned. You have to wonder how Trask and his staff could have been so far off in estimating where we'd be at this point. That's the hard question that must be put to him.

Point two - Today's news involves only "the university" -- which is to say the educational and research functions. It does not embrace Duke Health, the hospitals and so forth, which have a separate stream of income from patients and a separate budget.

From various, rather confusing and occluded reports, I gather that Duke in its entirety has about 43,000 employees but I cannot determine how many are on the "university" side and how many are at Duke Health. Thus, Fact Checker cannot state what percentage of people will be canned if 600 go.

Point 3 -- Trask says the goal is to shed 1,000 total. He claims 400 so far.

This 400 includes all the "low hanging fruit," in other words the easy harvest, with the rest being more difficult and painful.

The 400 includes all the vacant jobs that won't be filled and a phony addition of "equivalent workers" based on cutting overtime. This device is often conjured up by managers who fail to meet their actual head-count targets.

The 400 includes the people who took early retirement through the first incentive plan. The subtotal here is 295, but because of poor management, anyone who had attained a certain age and certain number of years service could seize the offer -- even if they were in a vital job. Trask has never shared with us the embarrassing, latest statistics on how many of the 295 had to be replaced. And at what cost.

There is a second incentive plan afoot, sent to 198 workers who have until early next month to decide if they will retire. This plan involves people whose jobs Duke has ranked as dispensable -- tacitly admitting the defect in the first incentive plan, and also letting the 198 know they have a gun to their head to either retire or be among the first selected for layoff. No one knows how many people will say yes by early December; Trask and his staff have said maybe 10, maybe 20 and maybe 50, which shows these managers would be better off posting some numbers on the wall and throwing a dart blindfolded.

Within Trask's department there is already an internal memo (subject of an earlier Fact Checker report) warning that Duke has so far enjoyed low rates in providing unemployment insurance, but that massive layoffs threaten to cost money in the form of higher premiums. Ouch ouch, on a hidden line in the annual budget.

The Chronicle does not mention in today's report a third incentive plan (subject of an earlier Chronicle report) that is underway -- a plan that has only been vaguely revealed to offer senior professors incentive to retire by replacing the money they lost in their personal pension plans. Wow -- someone to guarantee your IRA investments!

I am simply unable to take any wild guess on what this third incentive might cost. Let's say a professor has lost $250,000 from his retirement account -- which is entirely possible. How much is Duke going to replant? For how many people can you afford to do this?

This golden door plan for professors is not a scheme to trim faculty, but rather to open up slots for new hires. Meaning Dear Old Duke is one of the few universities in the nation with the Help Wanted sign at the door. We may get some great faculty, but we also have to worry about our ability to sustain these expenses for decades ahead.

Fact Checker notes that Duke lists 2,877 regular rank faculty as of June 30, 2009. Five years earlier, it was 2,477 and ten years earlier it was 2,159. At some future point, I shall explore what the hell they all do.

Readers who do not want to get drunk but who nonetheless want to send their heads spinning should try to decipher and reconcile some of Duke's financial reports.

For example today the Chronicle says that employees account for 2/3rds of Duke's expenses.

But in Trask's annual report "salaries and benefits totaled $1.2 billion, representing 57% of total operating expenses." These statistics are from page 5 of his printed report, page 3 of the PDF version, one more way to insure that it's difficult to find them or to cite them. There is a neat pie chart cut into pieces showing that 46 percent is salary and 11 percent fringe benefits.

If you do not like those figures, go to page 36 of the printed version, page 34 of the PDF, and you will find these: total salary and wages $1,772,762 with fringe benefits amounting to 18.2 percent.

These are not just numbers that I am trifling with. The difference between 2/3rds and 57 percent is huge. The difference between fringe benefits worth 11 percent and 18.2 percent is huge. At this point in time, these numbers are the life and future of Duke, and all of us should have access to clear understandable information about a crisis affecting the place we love. Students should particularly demand this; after all our President has admirably commissioned them not only to study here, but to help invent Duke's future, a process that can only proceed from information and transparency.

Finally, we should all also demand that the website http://www.duke.edu/economy/ set up to keep us informed be kept up to date. The Brodhead administration should be ashamed of itself for the state of this tool that it created only months ago.

This site should include information that would let each of us calculate how much has been saved -- for Fact Checker has difficulties with official figures as we aim toward a budget in 2011 that will be $125 million less than the 2007-08 budget. Well that was the goal, clearly stated, until some officials started to smudge it.

Thank you so much for reading Fact Finder today. √

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